Correlation Between Playa Hotels and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Cogent Communications at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Playa Hotels and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playa Hotels Resorts and Cogent Communications Holdings, you can compare the effects of market volatilities on Playa Hotels and Cogent Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Playa Hotels with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Cogent Communications.
Diversification Opportunities for Playa Hotels and Cogent Communications
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Playa and Cogent is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Playa Hotels is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Playa Hotels Resorts are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of Playa Hotels i.e., Playa Hotels and Cogent Communications go up and down completely randomly.
Pair Corralation between Playa Hotels and Cogent Communications
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.71 times more return on investment than Cogent Communications. However, Playa Hotels Resorts is 1.4 times less risky than Cogent Communications. It trades about 0.22 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.14 per unit of risk. If you would invest 1,180 in Playa Hotels Resorts on November 29, 2024 and sell it today you would earn a total of 80.00 from holding Playa Hotels Resorts or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Cogent Communications Holdings
Performance |
| Timeline |
| Playa Hotels Resorts |
| Cogent Communications |
Playa Hotels and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Cogent Communications
The main advantage of trading using opposite Playa Hotels and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Cogent Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cogent Communications will offset losses from the drop in Cogent Communications' long position.| Playa Hotels vs. SHELF DRILLING LTD | Playa Hotels vs. Pembina Pipeline Corp | Playa Hotels vs. Cal Maine Foods | Playa Hotels vs. China Modern Dairy |
| Cogent Communications vs. Salesforce | Cogent Communications vs. Austevoll Seafood ASA | Cogent Communications vs. CONAGRA FOODS | Cogent Communications vs. CANON MARKETING JP |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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